the tenant sets the pace, while the offer has to adapt

The current pace in commercial real estate market It is set by the tenant, given an offer that, although it has shown signs of recovery, is still contracted and there is a slow start on new projects, especially malls.

According to Luis Llaca, CBRE’s Vice President of Retail for Latin America, after the impact of the pandemic, commercial brands are in a hurry to resume the dynamism they had before the health emergency and, in addition, the behavior of leasing commercial spaces has improved, with better tenants, which points to a recovery in this area, but by the end of this year.

“The (commercial real estate) market is filling up with good tenants, with good commercial activity, which indicates that they can pay the rent, they are attracting people to the destinations of retail and I see a quite positive year”, commented Llaca.

“Sometimes the market belongs to owners, but sometimes it belongs to tenants. From 2020 to the first quarter of 2023, the tenant is in charge, says how to enter, almost almost says the price, term, contract and everything,” he added.

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For Llaca, the improvement in consumption is not the same in all areas, which complicates employment in mallsbecause although recreation activities or the sale of supplies for home improvement perform well, there are others that are not so attractive at the moment.

“Consumption in many turns is affected. So, when you have to fill a new shopping center of whatever size, you must have a mixed theme. For example, home services are going very well, but if you go to other turns, They are not having such good results, so it is also becoming more difficult (the occupation),” said Llaca.

Mexico City, leads in construction

For the CBRE specialist, macroeconomic factors, such as inflation and rate hikes, are factors that slow down the construction of new spaces; however, there are regions that are trying to resume dynamism.

“Although, in this type of development there is a lot of equity (capital contributions) and direct debt is not used, many investors are preferring to leave their money in short-term investments without risk,” Llaca explained.

“In addition,” he added, “the lack of facilities to access all the procedures and permits, for densities, land uses, etc., that is an important issue.”

In this context, some regions seek to resume dynamism in the construction of new commercial spaces, for example, in the center of the country.

Given the density of the population, the Mexican capital and the Metropolitan Area leads the construction activity of new projects, with 29% of the national total under construction and an increase of 59% compared to construction activity at the end of 2021, according to data from CBRE.

The national inventory of spaces for retailwith surfaces greater than 10,000 square meters (m2), grew 2.2% in 2022.

In this way, the country reached 25.5 million square meters, contemplating more than 430,000 new meters in the year.

However, CBRE highlighted that there is a trend in the design and construction of projects, which seeks to adhere more to the needs of each client.

In this sense, developers have opted to create more resilient properties, such as the malls mixed use. This type of building leads the activity in the construction of “malls”, with 33% of the spaces under construction.

Mexico City and its metropolitan area registered more than 215,000 square meters of mixed-use centers under construction at the end of 2022, concentrating 39% of the total inventory.

Some of the most anticipated “malls” in the city are: Patio Martín Carrera, developed by Grupo Indi; and Espacio Condesa, which will have a mix of offices, a commercial area and 406 apartments.

other regions

In the northeast of the country, the malls of mixed uses registered 9% of the total inventory and it is estimated that, between 2023 and 2024, 64,000 square meters of the same type can be incorporated.

For its part, the new supply in the northwest zone registered 38% of the new meters incorporated into the national inventory in 2022.

Cabo San Lucas and Tijuana were the markets with the greatest activity, adding 103,000 square meters of new offer under the concepts of “Lifestyle Center” and “Regional Mall”.

While the Mexican southeast saw the emergence of the “Los Héroes Mérida Town Center” project, with 30,000 square meters in Mérida; therefore, the city closed 2022 with more than 656,000 m2 of inventory.